Japanese Money Demand: Evidence from Regional Monthly Data

Abstract

This study estimates the Japanese money demand function by household using seasonally adjusted panel data following Fujiki and Mulligan (1996a, b). The most plausible estimates of the income elasticity of money demand are in the range from 1.28 to 1.35 for the period from 1990 to 1995. These results are robust with respect to the choice of scale variables, and consistent with the estimates based on seasonally unadjusted monthly data and annual data. The stable relationship obtained from regional panel data provides useful information with which to judge the stability of the money demand function for the central bankers.